The past few months have been fairly eventful for the industry and the markets have been fairly choppy for anyone's comfort. However, as they say, the darkest hour happens just before the dawn.
October 2018 saw the decadal anniversary of the Global Financial Crisis and had an eerie resemblance as far as the market movement was concerned for much of the month. In fact, October 2018 was also interesting from a records perspective, in that, it saw the 2nd highest domestic institutional buying in Indian equities while the FPI flows were the worst since 2008 in any month. On an YTD (Year-To- Date) basis, while small and mid-cap indices were already deep red (-18% & -26% respectively), large caps also slipped into red with Nifty 50 delivering -1.4%. The glimmer of hope has, however, come through the earnings season that has so far seen more positive news on corporate earnings estimates' achievement & outperformance than disappointments.
While global news (Trump, Saudi, China, etc.) competed for decibels with local markets (NBFC stress, IL&FS mess, etc.), the regulatory changes that finally came through the circular from the regulator capping the TER & bringing in more transparency in disclosures were more eventful from an industry perspective. While it does have near-term impact on business, it is notable that the industry has also grown and evolved over years. Many times in the past, similar landmark changes have almost similarly threatened the growth of the industry, however, proving to be pivotal in multi-year growth in retrospect.
I feel, hope and hard work will be important for keeping morale high and business going through tough times. The perceived credit crisis in the NBFC sector triggered by the IL&FS lynchpin seems to be coming under control. Both the government and the regulators have acted with alacrity and restored significant amounts of confidence and provided the much needed support for the markets to stabilise. With Oil now starting to cool, currency crawling back to normal, we can expect markets to retrace some of the losses too.
It is time to look at markets, both equity and debt, with the same positivity and hope that this festive season deserves and stands for. Historically associated with good tidings, hopefully, the coming month has a turnaround just around the corner. In times like these, it will be useful to reconsider portfolio asset allocation and category selection. Moderate to aggressive investors should start allocating to Large Cap and Diversified Equity Funds while conservative investors should continue being with Low Duration and Accrual Funds. The best route for longer-term savings continues to be our CSIP (Century SIP), which in its new avatar is even better than before.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.